CHICAGO, Nov. 23, 2012 /PRNewswire/ -- The BMO Retirement Institute today issued a report which found that many American retirees do not understand key issues surrounding Social Security and, consequently, are losing out on a significant amount of money that could be used to fund their retirement.
The report, Retirees Not Maximizing Social Security Retirement Benefits, revealed that many retirees are taking their benefits too early and are not necessarily aware of options and strategies that may result in higher benefits.
"With factors such as the volatile stock market, longer life expectancy, rising health care costs and fewer defined benefit pensions, Social Security may play an even bigger role in ensuring retirement security for the next wave of retirees," said Stephen Williams, Vice President, U.S. Financial Planning Strategy, BMO Private Bank. "It's vital that retirees do their research and seek out expert advice so they can make informed decisions to maximize their benefits. After all, they paid into the program – why not take full advantage of it?"
Timing Impacts DollarsThe report noted that the decision about when to take Social Security has an impact that can last a lifetime. For example, claiming Social Security as early as age 62 means receiving a reduced dollar amount for life; meanwhile, waiting until full retirement age or beyond yields a higher amount for life. However:
- While 91 per cent of respondents understood that waiting longer increases the monthly amount they will receive, almost half admitted they are currently collecting or planning to collect before full retirement age.
- Couples are particularly vulnerable since a claim impacts both for their combined lifespan and can significantly affect spousal and widow benefits.